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Matter of Dentsply Sirona, Inc. Shareholders Litig. v. XXX

Supreme Court of New York, New York County

August 2, 2019, Decided

155393/2018

Opinion

DECISION + ORDER ON MOTION

Upon the foregoing documents, it is

In this action alleging violations of the Securities Act of 1933 ("`33 Act"), defendants Dentsply Sirona Inc. ("Dentsply Sirona"), Jeffrey Solvin ("Solvin"), Bret W. Wise ("Wise"), Christopher T. Clark ("Clark"), Michael C. Alfano ("Alfano"), Eric K. Brandt ("Brandt"), Paula H. Cholmondeley ("Cholmondeley"), Michael J. Coleman ("Coleman"), Willie A. Deese ("Deese"), William F. Hecht ("Hecht"), Francis J. Lunger ("Lunger"), John L. Miclot ("Miclot"), John C. Miles, II ("Miles"), Thomas Jetter ("Jetter"), David Beecken ("Beecken"), William K. Hood ("Hood"), Arthur D. Kowaloff ("Kowaloff'), Harry M. Jansen Kraemer, Jr. ("Kraemer") and Timothy P. Sullivan ("Sullivan") (collectively, the "Individual Defendants" and together with Dentsply  [**2]  Sirona, "Defendants") move, pursuant to CPLR 2201 and CPLR 3211(a)(4), to stay this putative class action case brought by plaintiffs John Castronovo and Irving Golombeck (together, "Plaintiffs") pending final disposition of an action currently pending in federal court.1 Defendants also move, pursuant to the Private Securities Litigation Reform Act of 1995, 15 U.S.C. § 77z-1(b)(1) (the [*2]  "PSLRA"), CPLR 3214(b) and Commercial Division Rule 11(d), for an order staying discovery pending resolution of any motions to dismiss this action.

Dentsply International Inc. ("Dentsply Intl.") and Sirona Dental Systems, Inc. ("Sirona") were dental equipment companies founded in the late 1800s. Both companies designed, developed, manufactured and marketed dental products and services and sold their products to distributors, which in turn sold the products to dentists.

Three distributors — Henry Schein, Inc. ("Henry Schein"), Patterson Companies, Inc. ("Patterson") and Benco Dental Supply Co. ("Benco") (together, the "Distributors") — controlled up to 85% of the U.S. distribution channel for dental supplies and did business with Dentsply Intl. and Sirona. Plaintiffs allege that from 2008, the Distributors "engaged in an illicit scheme to control the distribution of dental products, limit competition and artificially inflate prices by intimidating and undermining smaller distributors and potential new competitors" (the "Anticompetitive Scheme"). As per the consolidated amended complaint ("CAC"), Dentsply Intl. and Sirona were aware [*3]  of, and  [**3]  complicit in, the Anticompetitive Scheme. The CAC further alleges that the Anticompetitive Scheme enabled the Distributors to maintain unusual and artificially high profit margins.

On September 15, 2015, Dentsply Intl. announced that it would acquire Sirona in an all-stock transaction, subject to shareholder approval, under which Sirona shareholders would exchange their Sirona shares for Dentsply Intl. shares. A prospectus ("Prospectus") and joint proxy statement ("Proxy") were filed in connection with the Acquisition (together, the "Registration Statement") and the SEC declared the Registration Statement effective on December 7, 2015.

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2019 N.Y. Misc. LEXIS 4260 *; 2019 NY Slip Op 32297(U) **

 [**1]  IN RE DENTSPLY SIRONA, INC. SHAREHOLDERS LITIGATION, Plaintiff, - v - XXX, Defendant. INDEX NO. 155393/2018

Notice: THIS OPINION IS UNCORRECTED AND WILL NOT BE PUBLISHED IN THE PRINTED OFFICIAL REPORTS.

Subsequent History: Motion granted by, Dismissed by Matter of Densply Sirona, Inc. v. XXX, 2019 N.Y. Misc. LEXIS 5193 (N.Y. Sup. Ct., Sept. 26, 2019)

Motion denied by Densply Sirona, Inc. Shareholders Litig. v. XXX, 2020 N.Y. Misc. LEXIS 578 (N.Y. Sup. Ct., Feb. 6, 2020)

CORE TERMS

discovery, Distributors, products, state court, inventory, Anticompetitive, motion to dismiss, channel, federal court, single-motion, Acquisition, overlap, dental, motion to stay, common stock, disclose, alleges, courts, cases